Behind Sri Lanka’s ambitious plan to restore tea production lies a structural crisis that industry leaders say can no longer be ignored the collapse in productivity among the country’s tea smallholders.
Although Regional Plantation Companies continue investing in replanting programmes and value-added exports, the future of the industry ultimately depends on more than 480,000 smallholder farmers who collectively produce about 75 percent of Sri Lanka’s tea crop.
The Tea Exporters Association (TEA) has warned President Anura Kumara Dissanayake that unless urgent action is taken to revive smallholder productivity, the country will struggle to increase exports despite having sufficient processing capacity.
The industry’s numbers reveal the scale of the problem. National tea production has fallen from 340 million kilograms in 2013 to just 261 million kilograms in 2025. Yet annual export earnings have remained broadly unchanged at around US$1.5 billion, largely because reduced production has offset gains from stronger prices.
According to the association, current green leaf productivity averages only about 150 kilograms per acre each month just one quarter of the estimated potential of 600 kilograms. Industry leaders attribute much of this decline to years of policy disruptions, including the glyphosate ban and wider agrochemical restrictions that severely affected plantation management.
Another challenge lies beneath the fields themselves. Many smallholdings contain fewer than 3,000 tea bushes per acre, well below the recommended density of approximately 5,000 plants needed for optimum yields.
To reverse the decline, the Tea Exporters Association has proposed a nationwide infilling programme supported through Government grants, concessional loans, local banks and international financial institutions. The estimated one-time cost is around Rs.200 per plant.
Industry estimates suggest the investment could generate substantial long-term returns. After approximately two years, improved productivity could increase annual farmer income by more than Rs.450 per plant. Over the productive life of a tea bush, each additional plant could contribute over Rs.850 in foreign exchange earnings based on current market prices.
The association also stressed that exporters possess capacity to handle approximately 400 million kilograms of tea annually, highlighting that the industry’s biggest constraint is not processing capability but insufficient raw material.
During a meeting held on 26 June, President Dissanayake reportedly expressed support for targeted assistance to smallholders, recognising tea’s critical role in Sri Lanka’s export economy and broader economic recovery strategy.
Industry observers believe that while production may recover modestly to between 290 and 300 million kilograms this year with the support of fertiliser subsidies and ongoing replanting, sustainable long-term growth will ultimately depend on restoring productivity among the country’s smallholder farmers.
Without addressing that structural weakness, Sri Lanka’s tea industry may continue operating well below its full economic potential despite growing global demand for premium Ceylon tea.